Commonwealth electoral regulation: Proposals to reform political donations and truth in political advertising

The new Commonwealth Government has signalled its intention to reform political donations and political advertising. The Joint Standing Committee on Electoral Matters (JSCEM) has opened submissions for its Inquiry into the 2022 Federal Election.

The JSCEM is considering whether, among other things:

• political donations should be disclosable if they exceed $1,000 (currently $15,200);
  
  
• donations should be disclosed in ‘real time’ (currently annually);
  
  
• electoral funding should be reformed, including public funding of parties and candidates, and caps on expenditure; and
  
  
• the law should regulate the truth of political advertising.

Submissions to the Inquiry will close on 7 October 2022.

Disclosure of political donations

The Commonwealth has the highest disclosure threshold of any Australian jurisdiction, being $15,200 (except for Tasmania, which does not currently require disclosure but is proposing to introduce a $5,000 threshold[1]). The Commonwealth Government has flagged reducing the disclosure threshold from $15,200 to $1,000.

The Commonwealth also has one of the most relaxed timeframes for disclosing donations, requiring disclosure only annually and within 15 weeks of an election. The Government is considering whether donations above the threshold should be disclosed in ‘real time’ by donors. The meaning of ‘real time’ is uncertain, but in Queensland that phrase is used to denote reporting within seven business days.

A comparison of the jurisdictions is set out below. The comparison assumes donations to political parties and disclosure by donors (as thresholds and deadlines may vary depending on the recipient of the donation and who is making the disclosure).

Truth in political advertising

Current scheme

The Australian Electoral Commission (AEC) enforces requirements that political advertising identify who has authorised it and not mislead voters as to how to vote. The Australian Communications and Media Authority enforces the prohibition on the broadcast of election advertisements on TV or radio during election blackout periods.

Truthful advertising is not required under the Electoral Act 1918 (Cth). However, section 329 of the Electoral Act does establish an offence for electoral advertising or communications printed, published or distributed during a formal election campaign that are “likely to mislead or deceive an elector in relation to the casting of a vote”.

Section 329 has been interpreted by courts to only cover the process of how to physically cast a vote, not the decision that leads to that vote.[2] For example, a person would be liable if they provided ‘how-to-vote cards’ that advocate optional preferential voting since, with limited exceptions, incomplete ballot papers are informal in Commonwealth elections and unable to be counted.

Proposals for reform

The Hawke Government introduced the first ‘truth in political advertising’ law,[3] but it was repealed after only eight months following adverse comment by the Joint Select Committee on Electoral Reform.[4] The law never operated during an election campaign period (after the issue of the writs) but did operate for two weeks after Hawke called the 1984 election.

Following the repeal of the law, South Australia enacted its own version in 1985.[5] A similar requirement took effect in the ACT in July 2021.[6]  Both jurisdictions prohibit electoral statements that are “inaccurate and misleading to a material extent”, but only apply to state or territory elections.

The courts have held that the South Australian law applies only to fact, not opinion, “because it is hard to see how an expression of opinion could mislead”.[7] Proposed legislation would need to be clear on whether it purports to regulate opinion.  

Another important consideration is whether the law will regulate promises as to the future, such as a commitment to enact a policy or a representation that social conditions will improve if a particular government is elected.

Recent Commonwealth elections have featured allegations of scare campaigns and calls for better regulation of campaign tactics that rely on questionable facts.

It remains to be seen which regulator would take responsibility for enforcement. Both the Australian Competition and Consumer Commission (which regulates misleading conduct in other fields) and the AEC (which regulates other election material) have expressed an unwillingness to be the regulator of truth in political advertising.[8]

Challenges to increased electoral regulation

The JSCEM may have to consider whether the proposed reforms are compatible with the Constitution, in particular the implied freedom of political communication.

In Australia, the High Court has found that there is implied freedom of political communication ancillary to the system of government established by the Australian Constitution. The implied freedom acts as a restraint on government action rather than as a positive right. Changes to donation and political advertising laws may be challenged on the basis of the implied freedom.

In previous Insights, we have explained the implied freedom and reviewed the High Court’s most recent decision on the topic, LibertyWorks. In short, a law that restricts political communication must be suitable, necessary and no more burdensome than required.

The High Court has previously found that the protection of the electoral process from undue influence is a legitimate end. The principal point of contention is whether legislation that seeks to achieve that goal is necessary and balanced.

It is unlikely that reduced disclosure thresholds or accelerated timeframes are unconstitutional, given they do not actually prohibit donations and have been implemented in the states and territories for many years. The decision in LibertyWorks suggests that merely requiring disclosure of political activity, rather than prohibiting that activity, is unlikely to be invalid.[9]

There is perhaps more scope for challenge to laws governing political advertising. A Federal truth in advertising law will need to be compatible with the implied freedom. The law will need to be carefully drafting with regard to the content and format of communications to which it applies.

The law will likely not infringe the implied freedom if, similar to the state and territory laws, it is limited to statements of fact in advertising. However, a law is more likely to infringe the implied freedom if it:

• prohibits misleading comments made outside of advertising;
  
  
• applies to people other than candidates and political parties (for example, third parties such as unions and business groups); and
  
  
• applies to the public at large (in which case it would almost certainly be unconstitutional).

Next steps

Organisations with an interest in the political process may wish to make submissions to the JSCEM inquiry by 7 October. In particular, they should consider whether changes to the law would increase the burden of disclosing political donations, including requiring more donations to be disclosed and sooner. Media and social media companies should consider whether the reforms would render them liable for false political advertising that they broadcast or that is posted on their platforms.